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Monday, December 24, 2012 10:20 AM ET
IHS: All Lower 48 states benefiting from shale

By Bryan Schutt

The unconventional oil and gas revolution is contributing to the economies both inside and outside the shale boom, according to a recent study from IHS.

The study, part of a series documenting the economic benefits of unconventional oil and gas production, measured the impact of unconventional activities in terms of jobs, economic value and government revenue for each state. Researchers looked at state-by-state results to conclude that, unsurprisingly, the economic contributions of shale are mostly driven by activity in the 16 states with production. Activity in the top 10 producing states supports nearly 1.2 million jobs, according to the report.

While two states with a rich history of development, Texas and Oklahoma, had a combined total of more than 650,000 jobs in 2012 linked to unconventional activity, Pennsylvania, North Dakota and Ohio had a combined 180,000 jobs linked to unconventional oil and gas activity.

The report also found that a significant portion of economic activity is also found in the nonproducing states. The 32 states in the Lower 48 that lack major unconventional activity will still contribute nearly 500,000 jobs in businesses that are part of the shale supply chain, the study found. The top 10 nonproducing states in terms of jobs are New York, Illinois, Michigan, Florida, New Jersey, Minnesota, North Carolina, Georgia, Missouri and Wisconsin.

"Our analysis indicates that both oil and gas producing and non-producing states alike are reaping the benefits of the unconventional oil and gas revolution," the study said. "Some states benefit through firms that participate in upstream exploration and production, while other states benefit through firms that comprise the vast supply chain supporting unconventional oil and gas development, or both. States also benefit from the interstate trade that occurs as the unconventional oil and gas income effect flows through the economy.

Nationally, total unconventional oil and gas production in the Lower 48 will contribute $63 billion in federal, state and local tax receipts in 2012, and total government revenues are forecast to grow to nearly $113 billion by 2020. Nearly $238 billion will be contributed in value added to the U.S. economy in 2012, IHS said.

The first part of the research series focused on big-picture economic impacts, including the total number of jobs created, the total capital spending involved in the shale boom, and the outlook for production and revenues. It projected that unconventional production would support nearly 3 million jobs by the end of the decade.

The next installment is expected to explore the potential for a U.S. manufacturing renaissance fueled by abundant energy supply. The research is supported by the American Petroleum Institute, the U.S. Chamber of Commerce's Institute for 21st Century Energy, the American Chemistry Council, America's Natural Gas Alliance and the Natural Gas Supply Association.

"Looking ahead, the potential is there for the unconventional oil and gas revolution to have an even broader impact on the U.S. economy," said John Larson, vice president for public consulting at IHS. "By lowering the cost of key industrial inputs — such as natural gas — this unconventional revolution could help lay the foundation for a renaissance in U.S. manufacturing and increased competiveness in the global economy."


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